Israel Folau finally admitted in his Rugby Australia hearing that he understood his social media posts could offend people, according to a new report.

And in that moment, his Australian rugby career was finished.

The latest installment of a special series from The Daily Telegraph's Walkley Award-winning rugby writer Jamie Pandaram details how Folau let his guard down under cross examination from Rugby Australia barrister Justin Gleeson SC.

Pandaram wrote that Folau had avoided culpability by claiming that he was simply quoting the bible when he said on Instagram that homosexuals, among other sinners, would go to hell.

But once the Wallabies star admitted that he knew his words were potentially offensive, his lawyers admitted to a breach of Rugby Australia's player code of conduct.

Yet Folau was grilled for another two days, during which he said that he would not remove his offending post, nor would he guarantee that he would not post similar content in future.

"He admitted guilt to an offence, but would not take steps to rectify that offence, and gave no promises he would not commit another offence," Pandaram wrote. "The case was done at that moment."

Israel Folau. (AAP)

The Wallabies fullback was sacked from a deal worth about $5 million, according to Pandaram; more than the $4 million previously reported. It was argued during the hearing that Folau had jeopardised millions of dollars in sponsorship deals for Rugby Australia.

Folau had already posted homophobic content on social media the previous year. Rugby Australia chief executive Raelene Castle and Wallabies coach Michael Cheika said that Folau had breached their trust and that of his teammates by re-offending.

Folau will now pursue Rugby Australia through the courts. He reportedly refused a settlement of $2 million and has still not removed his Instagram post, having been told by his father - Eni Folau, a hardline Christian pastor - that he would go to hell if he did so.